Senators to Debate Patent Bill

Monday

Feb 28, 2011 at 5:09 AM

Opponents fear the bill would give an advantage to big corporations over small inventors and make it harder for start-ups to protect their ideas.

EDWARD WYATT

WASHINGTON — The Senate on Monday will begin debating a bill that critics say will undermine American strength abroad, plunder the United States economy and exceed the government’s constitutional authority.

The subject: patent reform.

Rarely has the Patent and Trademark Office elicited such passions. But included in the bill is a long-debated feature that would change the federal patent system to a “first to file” protocol of determining patent priority — one used by nearly all of the rest of the world — from its current “first to invent” system.

“This bill would be death to innovation in America,” said Phyllis Schlafly, the conservative writer and activist who has rallied opposition to the bill among conservative groups like the Gun Owners of America and the Christian Coalition.

Those groups have joined in opposition with small-business advocates and groups of professional engineers, who say that the change would favor big corporations over small inventors and make it harder for start-ups to ward off people seeking to steal their ideas.

David J. Kappos, the director of the patent office and under secretary of commerce for intellectual property, disagrees, as do the Obama administration and scores of technology and manufacturing companies whose success can be traced, in large part, to the patents they received on their creations.

“This would be an enormous improvement,” Mr. Kappos said of the bill. The current, first-to-invent system does no more than grant an inventor “a lottery ticket,” with the right to defend in court whether he was the first to come up with an idea, Mr. Kappos said. A first-to-file system “adds transparency and objectivity” in the form of a clear line of priority — that is, who arrived first at the patent office.

The bill would also change procedures for challenging patents, before and after they are issued, alter how damages can be assessed and allow the patent office to set its own fees for applicants.

It also contains an odd provision that would outlaw patenting “any strategy for reducing, avoiding or deferring” federal, state or local taxes.

Sponsored by Senator Patrick J. Leahy, Democrat of Vermont, Senator Orrin G. Hatch, Republican of Utah and Senator Chuck Grassley, Republican of Iowa, the patent bill was unanimously approved by the Senate Judiciary Committee in February. As the first overhaul of patent laws in six decades, the bill appears to be on a bipartisan path to approval in both houses of Congress, each of which has approved similar legislation in the past.

But that effort could be threatened by grass-roots conservatives and the wild-card class of Republican freshmen in the House, who have already shown their willingness to break with party leaders. In the bill’s favor, the patent office is self-financing, and the legislation would not add to the budget deficit.

The office is one of the few government agencies whose specific duties are enumerated in the United States Constitution. Article 1, Section 8 calls on Congress to promote scientific progress by securing to inventors the exclusive right to their discoveries for a limited time.

A flood of new applications borne of the Internet age has left the office bogged down. A backlog of more than 700,000 unexamined applications means that it takes two years for an inventor to get an initial ruling on one, and a final patent usually takes another year.

“That is unacceptable, and I think it is scandalous,” said Gary F. Locke, the secretary of commerce, which oversees the patent office. The office’s computer systems are out of date, Mr. Locke said, and over the last decade, Congress has made a practice of siphoning off the office’s revenue for other uses.

Allowing the patent office to set its own fees, as the bill proposes, would allow Mr. Kappos to make several changes, including charging companies that desire a decision within a year of filing to pay extra to move to the front of the line. Mr. Kappos said he also wanted to cut fees for independent inventors and small businesses by at least half. Applicants currently pay about $4,000 for a patent.

Mr. Kappos disputes the notion that a first-to-file system puts small companies, which might need more time and money to develop a patentable idea, at a disadvantage. He said that the office already offers a $110 provisional application that secures a place in line and gives the applicant time to develop an idea before submitting a full application.

“The current system is just bizarre,” he said of the first-to-invent rule. “Imagine parking your car in a metered space, then someone else comes up and says they had priority for that space and they have your car towed. Under the new system, if you are the first to pull in and pay your fee, you can park there and no one else can claim it’s their space.”

Many corporate behemoths support the bill, including manufacturing and technology companies like General Electric, Caterpillarand I.B.M., where Mr. Kappos worked for 27 years before overseeing the patent office.

Those companies and other supporters say that the proposed changes would also help to keep patent disputes out of the court system, which inevitably adds millions of dollars to the cost of maintaining patent protection.

But opponents of the bill maintain that the current system is better structured to “give the little guy an advantage,” said Keith D. Grzelak, former chairman of the intellectual policy subcommittee of the United States branch of the Institute of Electrical and Electronics Engineers.

Changing to a first-to-file system, he said, could cause big companies to overwhelm the patent office with claims on every imaginable innovation, slowing the process further and crowding out small inventors.

“It’s still possible for a couple of guys who lost their jobs to India or Asia to invent something, put their money together and start a company,” Mr. Grzelak said. “If you don’t have a patent system that gives an advantage to the little guy, innovations aren’t going to happen here.”

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